Main Street Fairness Act Struck Down In Illinois


The internet sales tax saga took another interesting turn last week as the Illinois Supreme Court struck down the Illinois Main Street Fairness Act. This law, informally known as the “Amazon Tax” was passed by Illinois in March 2011 as a way to level the playing field between brick-and-mortar businesses and online retailers. It also defined the meaning of a merchant’s “physical presence” to include affiliate companies.


In simpler terms, this meant that if a company operated in the state of Illinois and was affiliated with an out-of-state retailer (in this case – Amazon), the retailer was supposed to collect sales tax whenever an Illinois customer bought something from them online.


Unfortunately, things didn’t quite go the way lawmakers intended and instead of agreeing to collect the tax, Amazon chose to sever ties with about 9000 of their affiliates. Adding to the fallout, several of the bigger companies, such as and then chose to leave the state of Illinois rather than forgo the commissions paid to them by Amazon.


It is important to realize that the way the law was originally designed to work was that either the online company was to collect the tax or the Illinois tax-payer was to declare the amount they owed on their tax return. As you might imagine, a lot of tax-payers chose not to do this which in turn put the burden for collecting the tax on the out-of-state retailer. As part of the ruling, Justice Karmeier even commented in his dissent that this was impractical.


The next question you may be wondering about is “where do we go from here?” Well, at the moment there is a moratorium in place that has the whole thing put on hold until November 1st of next year (2014). At that point, the moratorium will be lifted and buyers and sellers in Illinois can pretty much expect to find themselves right back where they started, which means the whole mess will probably start up all over again and all the parties will end up back in court.


This guest post was contributed by Kat Simpson. Kat is a trusted eCommerce author, speaker, educator, and entrepreneur. Kat Simpson has been a successful eCommerce merchant for over 10 years; is an eBay Education Specialist and Gold Level PowerSeller, as well as a successful Amazon merchant. Currently Kat is the hosts the popular weekly eCommerce Podcast That Kat Radio and an active Facebook Group ThatKat.


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